I found this on my way to work
And later picked up some pizza stuff and a loaf of bread
.... and after all that, I started playing with finances.
I've gone through the rent-versus-own argument (spoiler: owning a house is a horribly expensive luxury, not an investment), but I'm primarily focused on transportation. Transportation is an easy way to save money, although bigger gains are made by renting rather than owning when you have no specific reason to own a house. Learning to invest on a basic level (that is: keep an emergency fund, but put the remainder of your savings into stable bonds or ETFs or whatnot) gets a steady 7% per year gain in the long term and is another important financial skill; advanced investing starts to become a weekend, part time, and then full time job, and is discouraged as a major focus unless it's really your thing.
That's a lot of stuff in one little paragraph. The only part I'm inclined to expand on outside an essay is transportation.
As far as that goes, I've determined the following:
- Gas is cheap. Buying a Volkswagon TDi or a Prius won't save you money
- Maintenance is cheap. Maintaining your car costs around $1000/year as a dedicated driver, half as much as gas eh?
- Cars are expensive. Imagine a $20,000 car you drive 20k miles/year, in five years it's over 100k and most people sell it for $3000-$5000. Maintenance at this point is more expensive just to keep the damn thing running, but it's doable and not much more.
- Insurance, finance charge, etc.. The nickles and half-dollars. With full coverage insurance is expensive, liability only it's not.
Let's put this all together, huh?
First off, on gas. The average is $2000/year for gas, and upgrading from 25mpg to 43mpg drops that to $1150; you save $850/year getting a $25000 car versus a $15000 Corolla or Mazda3, good for you. Meanwhile here's my Mazda 3 for the month:
Say you buy yourself a $15,000 car with a finance rate of 3.6% for 5 years, you put no money down, tags and taxes come out to $600, you get GAP for $300, and you buy the extended warranty for $1400. $17,300 off the lot </fantasy>. You pay a total of $18,930 for the car ... not bad, $3,786/year.
$3,786, plus your $2,000 for gas, plus the $1,000 for maintenance, gives $6,786 to own this car.
To illustrate a point, you get the Toyota Prius for $25,000 at 3.6% for $900 taxes (sales tax goes up) plus a $1,900 extended warranty and $300 GAP. $28,100, becomes $30,746, or $6,149/year. Gas drops to $1,100 and maintenance for $1,000 (yeah, average goes up but I'll ignore that) gives $8,249/year to own this car.
Didn't I tell you gas was cheap and cars are expensive?
Now, I'm biking to work every day, and to the grocery store:
71.9 miles for the month.
Gas isn't my concern.
Notice that I did about 491 miles this month, 72 by car. 14.6% of my transportation needs are handled by bicycle. Notably, I've changed my habits to avoid biking so much or driving excessively: long weekend trips all over town have been eliminated in favor of better planning. Rather than traveling 96 miles in one day, I do my grocery shopping at the store near work on my way home from work (cuts 22 miles), bring home a larger load from the butcher out east and just bike it every other week or third week (eliminates 19 miles, but I drive that highway about 22 miles one way!), and make fewer trips to the markets up north (16 miles each way). This eliminates 400 miles of driving per month.
In other words, I've turned 900 miles of driving (3 tanks, $150) into 72 miles of driving, cutting back to 8% of my typical driving. The straight elimination (43%) is mostly grocery shopping that I do closer, although it prevents me from buying a specific type of butter ... which I can stock up on once every 2 months, really.
So, 92% of my driving expenses disappear. My car takes less maintenance, lasts longer, and eats less gas. That $3,786/year becomes $302.88, and I save $3,483.12. Thus far I've paid for my $450 bike in gas (although not for the expensive extras--$50 compression shirts, a high-visibility jersey, a new-model CamelBak...). In my case, I also dropped my insurance costs by 30% by using a Progressive Snapshot.
I feel I don't have enough mobility with the bicycle: longer trips (over about 8 miles for me; anything below has like a 5-10 minute time penalty at best, but I've beat my car to work by 1 minute once), trips when I'm tired, etc, are out of reach. Particularly, that 16 miles north... one day I want to do the whole circuit, it's 42 miles of biking to go to Binkert's (11 miles east), Farmer's Market and Wegman's (16 miles north), and H-Mart (11 miles west) in the most efficient path. I've done 29 in a few hours when I biked to the MVA to renew my driver's license (and stopped at Binkert's because it was 3 miles away).
Do I want to regularly ride north 16 miles through hilly city streets to go grocery shopping, then come back? ... no.
So I'm going to buy a motorcycle next year ... a nice little modest job, Kawasaki Ninja 250R. Back on a gas burner, how's that save me any money huh?
Ninja 250R: $4,000
Throw on some motorcycle hard-case panniers and I save half the gas costs. Maintenance per mile? It's similar to a car; motorcycles aren't cheap to upkeep. Insurance? Cheaper, but it's added on and so I have to pay that $30/mo (I'm not 28 yet, and I set my liability limits and medical injury limits HIGH). Amortize a $4,000 purchase over 5 years (unrealistic given how little I drive) versus a $17,000 purchase and you get $800/year instead of $3,400/year. It eats half as much gas, so you wind up with $1000/year for fuel instead of $2000/year.
In other words: It's cheaper to buy a brand new entry level sports motorcycle every single year
and just junk the old one (without reselling) if you can completely replace your car with it. Bigger sports bikes, cruisers, etc, not so much--more fuel and maintenance.
At this point I want to point out something about motorcycles: If you put 3 people on motorcycles, the costs of maintenance and purchase amortization and fuel usage triple; whereas 3 people in a car is very efficient. You may find it slightly cheaper, or slightly more expensive. Motorcycles aren't a great way to move people in bulk--trains, buses, and cars are actually good at this. Bicycles are fantastic in bulk for anything within biking range.
This means a car is great for a family, for family outings. One-car families make sense, of course; no-car families are quite a bit harder. A one-car family is especially sensible since you must run your car occasionally. I drive mine 3-4 times per month just to keep everything flowing, all around 10-15 mile trips, a couple extra long; those longer grocery trips are good for a twice-a-month run, but I kind of want to eliminate my car entirely. A single-car family will find plenty of use for their car; you can eliminate a lot
of use, but a family unit will still find plenty.
So even at the family level, you can maintain mobility and decrease expenses by having a diversified transportation plan. Bike more--it keeps you healthy, but also eliminates harsh short trips on the family car. Get a motorcycle for your daily commute to work, they're cheaper to eventually replace than cars and you only have to move yourself anyway. Possibly move to a single-car family and reap the savings of not
buying a second $20,000 car. Were you smart enough to rent instead of owning a home, and plan ahead to move into a bigger place as your family expands? Move into an apartment closer to work; bicycle there; save the gas and maintenance and replacement costs for your kids' college or for your future down payment on a house if you decide to buy one. You both work? Either both motorcycle, or decide who bikes and move accordingly.
In a family setting like this, it's important to have emergency independence. A motorcycle will move you quick; but if you're biking 5-10 miles and it's actually taking you much longer (some crazy people have an hour and a half commute here, but they can drive it in half an hour... mine is not a highway ride or uphill one way and down the next), you both need to know how to handle emergencies. Hell, even if you have a half hour drive, what's a car going to get you in an emergency? She's on her own; if you can be called, so can the police, fire department, ambulance, etc. If it can't be handled over the phone and it can't wait an hour, it's not going to wait for your 30 minute drive home either. This isn't an excuse to recklessly strand yourself an hour away; it's an important consideration for why you need to prepare for either of you (and eventually your kids) to be a single independent responder in an emergency.
So that's my rant for the day. Did I save on gas by biking? Yeah. Was that important? Not really; look what else I saved. Should everyone sell their car and go exclusively to a bicycle? Hell no; even I shouldn't be exclusively biking, and I need a motor scooter or motorcycle to supplement my transportation plan. Can families benefit? Yep, family life can massively benefit from the reduced expenses associated with reduced car use, and minimize the involved time investment and potential inconveniences associated.
As a final note, I'd like to point out that my insurance dropped from $234 to $113 each month, as I switched car insurance and started biking; my base rate is now $168/mo before the low usage discount. At $113, with 71.9 miles in $8.58, I spent 11.9 cents per mile on gas and 157.2 cents per mile on insurance. I spent 5.7 cents per mile on consumables for my bike (I use electrolyte tablets in my water; a coworker didn't listen, and recently wound up vomiting from too much pure water intake before being hospitalized with a heat injury). As I said, insurance is the nickles and half dollars of car ownership.